REGULATION

Stablecoin legislation close to passing! US Treasury Secretary Yellen: Regulators should strengthen oversight of stablecoin issuers and establish federal standards.

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Stablecoin legislation close to passing! US Treasury Secretary Yellen: Regulators should strengthen oversight of stablecoin issuers and establish federal standards.

During a recent congressional hearing on February 6th, U.S. Treasury Secretary Yellen stressed the urgency of implementing robust cryptocurrency regulatory measures to mitigate the risks that digital assets may pose to investors and the broader financial system.

Yellen Emphasizes the Need to Supervise Stablecoin Issuers

The discussion centered around the annual report of the Financial Stability Oversight Council, where House Financial Services Committee Chair Patrick McHenry asked Yellen for her views on proposed legislation aimed at strengthening stablecoin governance and clarifying the regulatory framework for cryptocurrencies.

Yellen highlighted the importance of regulation in key areas, particularly in protecting digital wallet holders and supervising stablecoin issuers.

Yellen stated, "In the area of digital assets, we have clear regulatory authority in many areas, but we have identified some gaps that would be helpful for Congress to act on to fill those gaps for consumer investor protection and addressing financial stability risks."

Varying State Approaches Call for Unified Regulatory Approach

Yellen specifically emphasized the lack of comprehensive regulatory authority by the Commodity Futures Trading Commission (CFTC) over the spot markets for commodities like Bitcoin and highlighted the potential systemic risks stablecoins pose to the U.S. financial infrastructure, advocating for a standardized federal regulatory framework to replace the current patchwork of state regulations.

Yellen's stance on the need for a federal regulatory floor for stablecoin issuers is consistent with her advocacy for clear regulatory boundaries for cryptocurrencies in the U.S., echoing previous public statements by the Treasury Secretary urging the establishment of a solid regulatory framework for the cryptocurrency space.

Progress on U.S. Stablecoin Legislation

Efforts to push for clearer regulation have seen some progress, with the House Financial Services Committee passing the 21st Century Financial Innovation and Technology Act and the Payment Stablecoin Clarity Act in July 2023.

These bills are now awaiting a full House vote, indicating significant strides that could be made in pursuing regulatory clarity and investor protection in the digital asset space.

Stablecoin Bill Nearing Completion

According to Representative Maxine Waters in an interview with Politico, the stablecoin bill is very close to completion. Financial Services Committee Chair Patrick McHenry has been pushing for the bill for the past 20 months.